8 McPherson: Benefit-Based Tree Valuation [9.2 in] dbh). In reality, a number of other factors would be involved in a decision to remove and replace these trees such as attitudes of local residents and availability of resources. However, the economic criterion for such a decision is straightforward: the most cost-effective strategy would have the highest NPV of benefits. Removal and replacement was not a cost-effective strategy at 7% and 10% discount rates (Table 4 and Figure 6). At higher discount rates, it was more cost-effective to retain the trees for the next 25 years, primarily because future infra- structure repair costs were relatively heavily discounted. For example, at the 10% rate, the NPV was $−4,803 for removing and replacing the five trees and $−1,129 for retaining the trees. NPVs were similar at the 4% discount rate, whereas the choice to remove/replace was clearly most cost-effective as- suming no discounting. In the latter case, net benefits totaled $−569 for the remove/replace option versus $−6,481 for maintaining the status quo. At lower discount rates, future infrastructure repair expenditures were less heavily dis- counted, making the tree retention option relatively less cost- effective. Expenditures for the tree retention scenario totaled $15,109 over 25 years (0%) and were discounted at 10% to only $4,672. Approximately one-third of the total expenditure was heavily discounted because it occurred at year 40 when side- walks, curb, and gutter were replaced (Figure 6). In contrast, expenditures for the remove/replace scenario were largely up-front and less heavily discounted; $9,194 at 0% was discounted to $7,159 at 10%. Initial costs for re- moval, site preparation, and planting the five pistache trees were $1,375. Added to this was $5,880 for removing and replacing sidewalk and curb and gutter, assumed to occur at the time of tree removal. Hence, initial costs for remediation and planting totaled $7,255, or 79% of the projected 25 year total expenditure. The importance of discounting on cost-effectiveness was apparent when considering the stream of benefits as well as expenditures. Total undiscounted benefits were nearly iden- tical for both scenarios ($8,629 and $8,625), but at a 10% discount rate, the PV of benefits was $3,543 for the tree retention scenario and $2,355 for the remove/replace option. With the tree retention scenario, benefits decreased as tree growth slowed, whereas benefits increased with time for the more rapid growing transplants in the remove/replace sce- nario. As a result, remove/replace scenario benefits were more heavily discounted. In summary, the most cost-effective decision depends on the manager’s discount rate. However, it is important to note that NPVs were negative for both scenarios and at all dis- count rates, indicating that the decision to plant this species in this location was ill-advised in the first place. Cost-Effectiveness of Initially Planting Pistache in Shrub Bed The final question addressed in this article was, “Using the benefit-based approach, can we determine how much money would have been saved if the trees had been planted in the better site originally?” The analysis compared the 40 year stream of benefits and costs for the current scenario with planting the same species in the nearby shrub bed. Tree growth and resulting benefits were assumed to be the same for both scenarios, although trees in the more spacious shrub bed were likely to grow faster than ones in the more restricted streetside location. Any differences in benefits are difficult to predict. Trees in the shrub bed will shade less street surface than streetside trees, and increased street shade has been re- lated to improved pavement condition and reduced repaving expense (McPherson and Muchnick 2005). Trees in the shrub bed, however, will shade more of the parking lot to the north. Shading parked cars can reduce evaporative hydrocarbon emissions that are involved in ozone formation (Scott et al. 1999). Given these uncertainties, this analysis assumed that benefits were held constant and focused on how differences in expenditures influenced cost-effectiveness. Not surprisingly, choosing to plant the five pistache in the shrub bed was far more cost-effective than planting them streetside (Table 5). NPVs for the shrub bed planting ranged from $1,578 (10%) to $8,695 (0%), whereas NPVs for the current location ranged from $−3,765 (0%) to $476 (10%). Savings associated with planting in the shrub bed ranged from $1,102 (10%) to $12,460 (0%), or $220 to $2,492 per tree. Nondiscounted benefits for both scenarios totaled $12,824, Figure 6. Average cumulative net present value of ben- efits per pistache tree at different discount rates for two scenarios (retain existing tree or remove and replant [R&R] in shrub bed) for years 16 to 40. ©2007 International Society of Arboriculture but expenditures were four times greater for the streetside location ($16,589) compared with the shrub bed site ($4,129) (Figure 7). NPVs increased with discount rate for the street- side planting but decreased with increasing discount rate for the shrub bed planting. This finding reflects heavy discount-
January 2007
| Title Name |
Pages |
Delete |
Url |
| Empty |
Search Text Block
Page #page_num
#doc_title
Hi $receivername|$receiveremail,
$sendername|$senderemail wrote these comments for you:
$message
$sendername|$senderemail would like for you to view the following digital edition.
Please click on the page below to be directed to the digital edition:
$thumbnail$pagenum
$link$pagenum
Your form submission was a success. You will be contacted by Washington Gas with follow-up information regarding your request.
This process might take longer please wait
